Title
RESOLUTION AUTHORIZING THE CITY TO ENTER INTO AN UPDATED AGREEMENT WITH THE MINNESOTA DEPARTMENT OF REVENUE TO ADMINISTER THE CITY OF DULUTH’S GENERAL SALES AND USE TAX.
Body
CITY PROPOSAL:
RESOLVED, that the proper city officials are authorized to enter into to an agreement, substantially in the form of the agreement attached as Exhibit A, with the Minnesota Department of Revenue to administer the City of Duluth’s general sales and use tax.
Statement of Purpose
STATEMENT OF PURPOSE: This resolution authorizes entering into an updated agreement with the Minnesota Department of Revenue to administer the City of Duluth’s general sales and use tax.
The Minnesota Department of Revenue (DOR), in accordance with state law, has been administering the City of Duluth’s general sales and use tax collections since 2006. The DOR is changing the administrative fee charged to local governments. The DOR previously charged a fee based on a pro-rated calculation associated with sales tax revenue and the number of returns filed. The new fee will be a flat 1.35% of sales tax collected and is reflected in the updated agreement. The new fee is applicable to all local governments for which the DOR administers local sales taxes.
In 2022 the City paid $126,461 on sales tax revenue of $29.4M. Under the new agreement the fees would have been $396,293 using the 1.35% rate. The increase in fees will be paid by the General Fund and Street Improvement Sales Tax Fund; both of these funds pay a share of the State’s administrative fee.